Cryptocurrencies return to losses on Black Friday; fear of FTX contagion
By Álvaro Estevez / Alejandra Zamora
Date: Friday 25 Nov 2022
(Sharecast News) - The cryptocurrency market is back in the red on Black Friday after a couple of days of modest rebounds. Bitcoin (BTC) has dropped almost 1% in the last 24 hours and is trying to consolidate at $16,500, while Ethereum (ETH) accumulated losses of more than 1.5% and has lost $1,200. The 'cryptos' have lost 1% of market capitalization ($828.49 billion).
"Confidence in the markets has been shattered and it may take time to rebuild it. There remains a great deal of uncertainty and as long as that is the case, the rallies we see in cryptocurrencies may simply turn into dead cat bounces, rather than market bottoms. The last one was around $15,500, from where it bounced a couple of weeks ago, and a break of this level could trigger another sharp drop," Craig Erlam, senior market analyst at Oanda, explained a few days ago.
After a couple of days of modest gains, driven by, among others, the Fed minutes, fears of how deep the ripple effect caused by the FTX bankruptcy could be have once again taken hold in the market. The latest casualty is the Digital Currency Group, especially Genesis and Grayscale, which face a dangerous liquidity crisis. "It is impossible to know who will fall next," Julius Baer stated.
"Bitcoin is still trying to stabilize after the FTX collapse. Unsurprisingly, the event has been a huge setback for the entire sector, both from a contagion and reputational point of view," Erlam pointed out, "Traders are now rightly wondering who else is exposed, how big the contagion effects will be and where else this type of activity is taking place."
For Oanda's expert, the lack of regulation in the sector makes these fears "very real." "They could undermine faith in the cryptocurrency space for some time to come, which would further weigh on prices," he explained.
In other market news, Ripple (XRP) rises almost 8%. Dogecoin (DOGE) advances slightly, while Cardan (ADA), Polygon (MATIC) and Polkadot (DOT) drop between 1% and 3%. Solana (SOL) is back in the red and is slightly above $14, a third of what it was worth before the fall of Sam Bankman-Fried's exchange.
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